Supporters of Proposition 21 are describing a world where millions of tenants are being exploited and harassed by greedy landlords. They say rents go up while salaries stagnate. Extreme rent control is seen as the necessary solution to end such injustice, reduce homelessness, and provide relief to stressed family budgets. Landlords are seeing as exploiting helpless tenants, in a naked pursuit of profit.
Unfortunately, this depiction is simplistic, and the solution proposed ineffective and damaging.
“Tenant” is not a social class. There are rich tenants and poor tenants. There are large families and single household tenants. As a group, “tenants” is a meaningless classifier. You have the young rich doctor who feels that as long as he is bachelor, he will live in a fancy rented apartment rather than facing the chores of real estate ownership. You have the poor family of Central American immigrants where the parents work long hours for a small pay, and live in shabby neglected tenements where they are harassed by landlords who are obsessed that their tenants might stop paying rent. And you have the retired people. Here too, the typology varies a lot. Some retired people have hefty savings and choose to sell their houses to live in smaller, more modest housing so as to simplify their life. Others have to live on meager pensions, and have to constantly struggle with rising costs while their pension remains the same.
While the general perception is that salaries tend to stagnate, this does not take into account that people actually change jobs, get career boosts, get married and form families, and all this means change and evolution – not stagnation. Any tenant today might tomorrow become a landlord.
“Landlord” is a general term for investors in rental property. They can be divided into two broad categories:
1. large corporations which handle thousands of rental units sometimes across several states. These organizations see the tenant as an asset to contribute to the value of their property. They seldom see the tenant as a human being. The logic of their business is to maximize profit, and are naturally led towards adopting exploitative policies to achieve their goals
2. small-scale investors, who buy rental property often as part of their retirement plans. These people are a social class of their own. They are not poor, but they are often not very wealthy, either. They rely on handymen, contractors and building managers to manage and maintain their properties. Most of them have taken loans to purchase their buildings. They undertake a significant amount of administrative work to secure their loans, remain compliant with housing laws, and often start off with almost no profit margin on their investment – they count on the time when their loan is mostly repaid to actually see a return on their investment. Since their housing purchase is part of their estate planning, they often put their properties into LLCs or family trusts.
Regarding homelessness, it is sometimes said that the problem is caused by high rents. This is not true.
Almost all long-term homeless people are people with mental problems, or have problems with substance abuse (alcohol or drugs). Giving them a home will not help them because their problems make them incapable of handling a home. They need much more help than merely giving them a bed to sleep in. A number of people every year become temporarily homeless through difficult circumstances. They might lose their job and then get evicted because they are unable to pay rent. These people might end up living off savings and sleeping in their car for a while, until they find a new job, and maybe move to a cheaper neighborhood. They are not the scruffy people we see cussing and urinating at street corners.
Parts of California are suffering from a housing shortage, due to population movements and relatively high birth rates. This has pushed up local real estate prices and brought rising rents. It is fundamental that Californians act together in a concerted effort to remedy this situation. What we need is new construction in areas that need it, new homes for the ever increasing new Californians. Unfortunately, I hear too many Californians rejecting new constructions as an unwelcome disruption to their traditional way of life.
Unfortunately, I think Californians will have to get used to a much more crowded future.
Most people, tenants or landlords, are moved by the same instincts. They seek comfort and wellbeing for themselves and in doing so sometimes forget the humanity in their counterpart. Prop 21 foments antagonism, it treats landlords as the enemy that has to be defeated. Hardly a recipe to reach a lasting solution to the problem at hand.
We need a solution that encourages investment in affordable housing. California is an attractive state. One of the richest and most resourceful ones. It is partly for these reasons that its population has increased significantly over the past decades. This increase has brought about a true housing crisis. Provided Californians eventually accept that their cities will have to become more crowded to accommodate the rising number of people coming here, how do we go about providing for these masses?
We need to approach the problem from a more systemic perspective – tackle the real issues such as housing scarcity in many areas of Southern California, and the difficulty for low-income households to secure decent housing. These problems are best handled by providing tax incentives for real estate investors to build affordable housing in the places that most need it and using state funds to expand existing housing voucher schemes. This society-wide approach is the one used in many European countries.
As far as rent control goes, California has recently introduced AB1482, which establishes a state-wide rent control system to protect tenants against rent hikes. The system could undoubtedly be improved. But hardly through constant policy changes and completely rewriting legislation. An important thing when making policy is to preserve a coherent approach. AB 1482 only took effect a few months ago. Prop 21 would gut it by allowing local communities to bypass it entirely. Again, there would be a lack of consistency in policy making. Again, the fundamental issues would not be addressed coherently but with a piecemeal approach.
Prop 21 would allow local communities to extend Rent Control to any Single Family Homes not owned
by a natural person. It will treat anyone who owns more than one or two houses as a for profit corporation. Through such provisions, Prop 21 would hit hard at small landlords, while large corporations will as usual use their lobbying might to find loopholes and buy their way out of trouble.
Prop 21 will increase bureaucracy and state control.
Since AB1482 already provides protection for tenants, Prop 21 will only add an additional layer of complication and bureaucracy for both tenants and landlords.
Prop 21 pursues a zero sum game, while we should aim much higher. Prop 21 is designed to allow special interests to take over the housing sector in local communities. It will inevitably lead to more antagonism between landlords and tenants, which flies against the obvious fact that we need as much as possible a consensual approach, one where all sides feel they are taking more than they are giving.
Prop 21 is the wrong solution to California’s housing problems.
Prop 21 is at best unnecessary, at worst damaging to both tenants and landlords. It’s a solution waiting for a problem.
Today in California it would be best to build on AB 1482, work to patch its deficiencies and aim at a system that makes both landlords and tenants work *for* rather than *against* the common good. I don’t see Prop 21 working towards any of those goals.
That is why Prop 21 is not an adequate solution.